How will 20 percent tax encourage businesses to invest?

The Post-Standard's Feb. 4 editorial, "Wanted: Better IDAs," was based on information provided to the newspaper by an organization comprised of labor unions and environmental groups called Jobs with Justice.

Last May, Jobs with Justice issued a report critical of Industrial Development Agencies. Their report claimed that projects financed by IDAs estimated they would create 217,000 jobs in 2005, but only created 79,000.

If this were true, it would be reason for concern. That is why the New York State Economic Development Council engaged the Center for Governmental Research, to gather accurate and comprehensive data from the New York State Office of the State Comptroller and from IDAs themselves; analyze the data, as well as the JWJ study; and report their findings.

CGR is a highly respected non-profit organization headquartered in Rochester that does research in areas related to government management, economic analysis, government finance, health and human resources and workforce development. The Center for Governmental Research report tells a very different story.

ÖIn 2005, the number of jobs created from IDA-assisted projects was 309,504 (124 percent higher than projected), not 79,334, as reported by Jobs with Justice.

ÖIDAs exceeded their job creation goals by almost 60,000 jobs, about one quarter more than was estimated to be created. Jobs with Justice reported that only 37 percent of the aggregate target was created.

ÖThe Center for Governmental Research's analysis of the record found only a single IDA reported overall job loss in 2005, not 13 as reported by Jobs with Justice.

ÖThe Center for Governmental Research found that 16 percent of projects posted job losses, not 25 percent as reported by Jobs with Justice. One-third of these involved fewer than 10 jobs.

The report also found that about half of the projects that fell short of job projections still created 60,000 jobs in their communities. Had the projects not occurred, the jobs would not have been created.

The Center for Governmental Research report also found that "(T)he summary of the record published by JWJ is demonstrably biased and incomplete."

When the facts are actually assembled and intelligently evaluated, the value of IDAs can be reasonably measured. The record, while not perfect, is positive, and given the economic environment in which IDAs operate, especially Upstate, it is clear that IDAs make a significant contribution to local economic development efforts.

Some in Albany want to saddle IDA project owners with burdensome union wage requirements. This is the real agenda of the unions, not reforms-related transparency and accountability.

But, according to another Center for Governmental Research report, such a requirement would increase labor costs by 38 percent and overall projects costs by nearly 20 percent in the Syracuse area. These increased costs would be added to projects that want to invest in our communities. If enacted, many would choose to invest in other states.

In 2007, Upstate private sector employment increased by 0.3 percent, or one-third the national average. From 2000-2006, Upstate lost 1.5 percent of its private sector workforce, while the rest of the nation grew by 2.9 percent. Clearly, Upstate has a competitive problem. It is difficult to understand how imposing a 20 percent tax on businesses that want to invest in our communities would help.

The New York State Economic Development Council is hopeful that Albany leaders will work together, make positive improvements to help economic development, and not impose yet another self-inflicted wound on the Upstate economy.

Brian McMahon is executive director of the New York State Economic Development Council.